Anne Is a Self-Employed Electrician Who Reports Her Business Income

question 85

Essay

Anne is a self-employed electrician who reports her business income using the accrual method over a calendar year. On September 1st of this year, Anne paid $2,940 of interest on a loan. The interest accrues evenly over 21 months ($140 per month)from June 1st of this year through December 31st of next year. In addition, on September 1st Anne also paid $3,400 for 20 months of professional liability insurance ($170 per month). What amount of interest and insurance can Anne deduct this year?